Jim Cramer: Chip stocks are staging a revenge trade for last week’s misguided selling

Semiconductor stocks rebounded after last week’s sell-off, with iShares Semiconductor ETF down 6.4% on Wednesday and 5.6% on Thursday, as investors rotated away from AI winners. CNBC’s Jim Cramer framed Monday’s bounce as a “revenge” trade after The Information reported Anthropic may explore custom AI chips with Samsung, pressuring traditional suppliers (e.g., Marvell -9.8%, Micron -5.5%). Buyers returned Monday (Intel, Arm, and Broadcom up 3%+), helped by Broadcom extending its Apple custom-chip partnership through 2031, while Nvidia lagged on reports of delays to its next Kyber rack-scale server system; Cramer argued the stock’s <19x forward earnings valuation suggests selling may be overdone.

Analysis

This is mostly a positioning reset, not a fresh fundamental inflection. After a crowded AI de-risking, the first rebound usually goes to names with the cleanest recurring revenue and the least binary exposure to one product cycle; that favors AVGO more than the pure GPU/accelerator complex. AVGO also has the best optionality if custom silicon keeps expanding, because it monetizes both design wins and the ongoing software/infrastructure stack around them.

The more important second-order effect is not that AI demand is disappearing, but that the mix of AI spend may shift from merchant GPUs toward custom ASICs and system integration over 6-18 months. That is a revenue-quality issue for AMD and MRVL first, and only later for NVDA, because training remains GPU-dominant while inference is where customers can rationalize bespoke chips. SSNLF and INTC only benefit if they convert headline design interest into qualified volume with acceptable yields; otherwise they remain a low-conviction hedge, not a durable winner.

Contrarian view: the market may be underestimating how much of NVDA’s weakness is already in the multiple. If the rumored rack delays are timing, not demand destruction, the stock can recover quickly on any confirmation that shipment schedules are intact. The key falsifier is the next guide: if backlog or systems revenue slips, or if hyperscaler capex commentary rolls over, the current bounce in SOXX is likely just a short-covering rally rather than a new leg higher.

Key Decisions for Investors

• Long AVGO / short MRVL for 1-3 months: best relative-value way to express custom-silicon share gains and lower execution risk; target 8-12% spread outperformance, cut if MRVL order commentary improves or AVGO guidance fails to accelerate.
• Hold NVDA as a tactical long only on pullbacks into support; use call spreads into the next earnings print to capture a potential mean reversion, but exit if channel checks confirm real rack/system delays rather than timing noise.
• Avoid chasing AMD on the rebound; if anything, use AMD as a short-versus-AVGO pair for 4-8 weeks because its valuation is still more exposed to a mix shift away from merchant accelerators.
• If SMH/SOXX cannot reclaim and hold the 20-day moving average over the next 1-2 weeks, fade the bounce with a small short or put spread because the move is likely flow-driven rather than a durable fundamental rerating.